Biden’s Green Bank Urged by Watchdog to Halt Work on Loans

(Bloomberg) -- The US Energy Department’s independent watchdog is recommending the agency’s $400 billion green bank stop work on loans after finding improper management of conflicts of interest.

The interim report by the department’s inspector general urged the agency’s loan program “put into abeyance” all pending loans and loan-guarantee packages after concluding the Loan Programs Office wasn’t conducting proper oversight of third-party contractors or conflict-of-interest information from contractors. 

“The Department of Energy Loan Programs Office is administering more than $385 billion in new loan authority without ensuring a regulatory and contractually compliant and effective system to manage organizational conflicts of interest,” Inspector General Teri L. Donaldson wrote in the report. “This poses a significant risk of fraud, waste, and abuse.”

The report, released Tuesday, comes as the Loan Programs Office — one of President Joe Biden’s key climate-change initiatives — seeks to close billions of dollars in deals prior to the Jan. 20 inauguration of President-elect Donald Trump. The program has tens of billions in conditional commitments pending, according to agency data.

Among those pending deals is a record $15 billion loan commitment announced Tuesday for Californian utility PG&E Corp., a $6.6 billion commitment to Rivian Automotive Inc. and an offer of almost $1.7 billion in financing for hydrogen maker Plug Power Inc. The loans office also announced Tuesday the closure of a $7.54 billion loan for a joint battery venture between Samsung SDI Co. and Stellantis NV Tuesday and the completion of a $9.6 billion loan to a joint venture between Ford Motor Co. and SK on Monday.

The Energy Department criticized the inspector general’s interim report as “unorthodox” and “filled with errors.” 

“The Inspector General fundamentally misunderstands the implementation of contracting in LPO,” the department said in a statement. “We stand confident in knowing LPO is in full compliance with the Department of Energy’s conflicts of interest regulations and take conflicts of interest very seriously.” 

The department also said it objected to the recommendation it pause work on pending deals set to be completed before Jan. 20, arguing that the report didn’t identify any conflicts of interest. 

(Updates with recent loans in fifth paragraph, Energy Department objection in final three paragraphs.)

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